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Closing Comments

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Closing Comments

Corn

Corn reverses early from yesterday’s weakness but can’t sustain strength into the close.

Stocks put in new highs while the dollar saw choppy trade on Chairman Yellen’s comments today to the Senate banking committee that investors should prepare for the end of the Fed’s zero interest rate policy by saying a change in their pledge to be “patient” over the timing of a rate raise could come at any upcoming Open Market Committee meeting.

Firm US domestic basis continues to provide support to the corn market, but talk of lower world prices and hedge pressure from old crop prevent the corn market from participating in any sustained positive direction for now.

For the close, March corn managed to match yesterday’s low tick – closing on its heels unable to find willing buyers to sustain a reversal day. The MACD crossed for lower while stochastics came out of the overbought territory. Corn has historically ran out of sellers and found buyers at these levels, but the inability to get March to close above 3.81 today casts a continued bearish sentiment to the old crop market.

December corn is showing a significantly stronger market than the old crop, with closes both yesterday and today able to hold above monthly support. Decent volume yesterday and today may leave the sustainability of a down market in new crop corn in doubt.

Soybeans

Soybeans ignite fireworks on continued Brazilian trucker strike. March trading up 30 at one point.

Reports from Brazil state the government officials are moving to file lawsuits against trucker groups that are blocking highways in seven states. They are proposing to levy high value per hour fines against the groups that are blockading traffic.

Nearby board crush margins near $1.15 have extended into the highest levels of this winter which is providing support to the old crop cash markets and futures. While crushers have good ownership, cold weather may be supporting soy basis in the east.

Funds are reported to be aggressive buyers across the board in the soy complex. Having bought 10,000 contracts by mid-session of soybeans. Some of the weakness in the later part of the session is reportedly tied to continued farmer hedging, especially among southern growers.

While the soy complex closed well of the daily highs, November managed to close just above the 100 day moving average. The first time since January 9th and it gave the highest close since January 13th.

Wheat

Kansas City leads wheat higher early in the day on Egyptian tender.

Egypt announced that they bought 290,000 mt of wheat at their Tuesday tender which along with the support from soybeans helped wheat strength early in the session. Unfortunately the wheat complex was not able to hold up to softening corn and soybeans mid-session and weakened into the close.

Kansas City was able to stay green on the close but Chicago and Minneapolis closed either side of unchanged. The KC-Chicago spread has been able recover this week, showing some hope that KC can start leading the complex, but all-in-all the spread has done nothing but consolidate since mid-November.

Beef

Live cattle futures to lowest low since May of 2014.

Asking prices remain at $162 live earlier today in spite of weakness in the futures. A light production schedule this week is allowing packers to raise asking prices. Strength looks to be developing in the middle meats on anticipation of grilling season.

In futures, feeders led the way lower today with the entire beef complex refuse to find strength for higher coming out of the several week consolidation period. Technicians will say that prices correct either by price or by time – since mid-January beef has corrected in time by trading sideways. This week however they appear to have resumed their bearish trend. August feeders need to find support at 196 and April cattle need to hold at 144.

Pork

Hogs consolidate after three days higher.

Cash hog bids are steady to higher today with some $1.50 higher. Producers may be getting caught up on marketing and it looks as though numbers out front are not quite as big as they have been. While weights are still quite high, producers seem to be able to hold off marketing on anticipation of higher prices.

Unfortunately, in spite of slowdown in marketing, with large numbers and big hogs, even pork features have had trouble taking care of the production the past couple weeks.

Technically the hog complex seems poised to continue somewhat higher, but is encountering some resistance at moving averages as well as congestion just above current prices. Today looks poised to give April hogs their first close above the 20 day moving average since late November.

Closing Market Snapshot

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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